SUCCESSFULLY REWRITING YOUR FAMILY’S FINANCIAL STORY BY ERASING THE “BLACK TAX”
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
ERADICATING THE BLACK TAX WITH FINANCIAL LITERACY
Black tax refers to the financial responsibility often placed on black adults. It’s the expectation for successful black individuals to financially support their extended family members, including parents, siblings, or relatives. This may include education, healthcare, housing, or general living expenses.
All over the world, adult children support their parents and families when they have the means. But this significantly impacts the personal finances and wealth accumulation of those burdened.
Mom and Dad routinely helped my Grandparents and others financially. This was just another life lesson I learned: Take care of those you love! As I grew older, I saw some of my cousins and others continue this practice with their parents.
Mom was financially literate, a great saver, and did not need our help. But it was Mom! We always looked for significant household improvements {carpet, repairs, HVAC, furniture, etc.} and paid because we loved our parents. We had our routine. Mom would say I don’t need you two to pay, and we would, for once, ignore her. We owed our parents more than we could ever repay.
THE LONG-TERM COST OF THE “BLACK TAX”
- Limits the amount you can save in your 401K and other accounts and invest, affecting your long-term financial stability.
- It may hinder you from additional educational pursuits that would improve your chances of climbing.
- It can create emotional stress with your spouse and family.
- It leaves you with fewer dollars to build wealth and pass it on to future generations.
LOVING OUR KIDS BY FINANCIALLY TAKING CARE OF SELF!
If you supported your parents or family members, I commend you, and you most likely will inherit little. According to a 2018 study published by the National Bureau of Economic Research, the median inheritance received by White individuals was approximately $43,000.00, whereas the median inheritance for Black individuals was around $11,000.00.
PASSING ON LEGACY WEALTH
- ALWAYS SPEND LESS THAN YOU EARN!
- Maximize retirement savings by contributing to retirement accounts such as 401(k)s, IRAs, or ROTH IRAs. ALWAYS contribute enough to EARN the employer matching dollars.
- Build your knowledge and financial literacy. Read, look at YouTube, take community college classes, etc.
- Diversify your investments across different asset classes, such as an S&P 500 ETF, real estate, etc.
- Consult a financial advisor to create a well-balanced investment portfolio tailored to your risk tolerance and long-term goals.
- Only in an emergency/last resort should you withdraw funds from your retirement accounts prematurely, EVEN FOR YOUR KID’s EDUCATION – THIS IS ILL ADVISED. Early withdrawals not only diminish your retirement savings but will incur penalties and taxes. Sacrificing your future independence to pay for your children’s college costs with retirement funds may place the black tax burden on your kids!
- Plan for Their Education: Save for your children’s education through dedicated college savings accounts like 529 or education savings accounts. Starting early and regularly contributing to these accounts can help reduce the financial burden of higher education expenses.
- Teach your kids to look at less expensive options, such as attending a community college for the first two years.
- Attend state universities.
- Study and work their behinds off to get scholarships.
- Working part-time during the summers and in college.
- Summer internship to earn money and gain experience and, if necessary, some loans.
- Teach your kids you MUST look at the Return on Investment [ROI] of a desired degree. If you love music, great, but do not sign up for a $140,000 debt for a degree that will earn you $24,000/year!
- Consider trade school or two-year programs.
- Educate Your Children about Financial Literacy: Teach them money management, budgeting, and saving from an early age. Instilling sound financial habits will equip them with valuable skills for their FUTURE financial security.
CONCLUSION – LEAD BY EXAMPLE
Every Saturday, I rode with Dad to buy groceries at Piggly Wigley {yes, this is a southern grocery store chain}. I loved it because everyone wanted to chat with Dad, so I was free to fill Mom’s list and MINE! When we left the store, we always drove to Grandmom’s house and dropped off her groceries—an excellent lesson for a young child without a word spoken. Dad’s priorities were simple- everyone he loved before himself.
Be a role model for your children by demonstrating responsible financial behaviors. Show them the importance of saving, investing, and making informed financial decisions. Openly discuss money matters and involve them in age-appropriate discussions about family finances. And if you need to help those you love, do so.
Protecting your retirement provides a safety net that ensures your loved ones a brighter and more secure future. Buy life insurance, create your will, and prioritize retirement savings to establish a solid foundation for your family’s financial future.
WHAT SUBJECTS DO YOU WANT TO READ NEXT? WHAT QUESTIONS CAN WE ANSWER? UNTIL NEXT TIME!
LET’S MAKE SOME MONEY! – CRYPTOCURRENCY, ANYONE?
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE!
I GIVE BECAUSE I CARE!
St Jude Hospital: The mission of St. Jude Children’s Research Hospital is to advance cures and means of prevention for pediatric catastrophic diseases through research and treatment. Consistent with the vision of our founder Danny Thomas, no child is denied treatment based on race, religion, or a family’s ability to pay.https://www.stjude.org/
Wounded Warrior Project: An American charity and veterans service organization that offers a variety of programs, services, and events for wounded veterans of the military https://www.woundedwarriorproject.org
Folds of Honor: Providing life-changing scholarships to the spouses and children of America’s fallen or disabled military. And now, our mission expands to the families of America’s first responders. On our watch, those who protect our freedoms and our families will know they are not forgotten. https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: A N0-Kill shelter that is a top-rated non-profit. They compassionately care for all their animals. https://wcnkas.org
Tunnel To Towers: Since 9/11, we have been helping America’s heroes by providing mortgage-free homes to Gold Star and fallen first responder families with young children and by building specially-adapted smart homes for catastrophically injured veterans and first responders. We are also committed to eradicating veteran homelessness and helping America to Never Forget September 11, 2001. https://dogood.t2t.org/give/320847/#!/donation/checkout
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for Financial Literacy. I will help you get there.
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